From Deseret News archives:

Salt Lake might back out of fiber-optics venture

Council has qualms about financing for UTOPIA project

Published: Tuesday, Dec. 9, 2003 7:27 a.m. MST
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Following that allocation, the council will be asked to put up $4.8 million in sales tax revenue per year to back the bond. That money would not be used if UTOPIA proves profitable. But if the project fails to make money, the city would be forced for 20 years to contribute some or all of that $4.8 million to UTOPIA each year that the system didn't make money.

The council could opt to remain in UTOPIA but not back the bonds, but then the city would miss out on any profits UTOPIA makes, and other member cities would have to put up enough of their own sales tax revenues to back the bonds.

All the financial uncertainty makes the risk too great, said Councilman Eric Jergensen, who last week asked Fluhart when the city entered the venture capitalist area.

"I'm deeply concerned that this will take us into an area of financial risk our city cannot afford," Councilman Eric Jergensen said.

Ditto, said Turner.

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"It's the long-term sales tax we'd be on the line for that's the concern, and since we're the biggest contributor I think the project pretty much lies on our shoulders," he said. With the City Council expressing doubts, Qwest officials are scheduled to meet with Anderson and Fluhart today to detail the company's concerns about UTOPIA competing with private fiber providers, like Qwest and Comcast. There are benefits that keep council members interested. For starters, some council members worry that if West Valley City is up and running on UTOPIA, then it could attract more businesses away from Salt Lake City.

Still, downtown Salt Lake City is already full of fiber lines from the private sector, so some council members wonder if UTOPIA really benefits more rural cities rather than Utah's capital.

Councilman Carlton Christensen, who probably knows more about UTOPIA than anyone on the council, is also its biggest supporter.

The current situation with Qwest and Comcast, says Christensen, amounts to a two-company monopoly on fiber. With UTOPIA in the ball game, the fiber market could expand wildly, Christensen said. Businesses are already making relocation decisions based on access to high-speed fiber, he said.

"I don't know if my colleagues are as enthusiastic about it as I am," he confessed. Still, Christensen hopes his fellow council members get educated about UTOPIA's benefits before they opt out.


E-MAIL: bsnyder@desnews.com

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